Sterling continues to drift lower

11 October, 2013

Rob Bastin

Yesterday’s trading saw a number of key releases in the currency markets but without providing too much to talk about on the exchange rates. The Euro-zone kicked off with their monthly report from the ECB and they once again provided further forward guidance on interest rates, maintaining that they will remain ‘low or lower for an extended period of time’ in order to support the gradual European recovery. The report also pointed towards the first positive growth for nearly 2 years in the second quarter of 2013, lending a small boost to the Euro in morning trading.

The UK shortly followed with the interest decision from the BoE, announcing a widely expected hold on interest rates at 0.5% and a hold on the current asset purchase facility. Many were hoping for some kind of accompanying statement but we were left disappointed and the markets were subdued with the pound trading within a small range against its major pairs.

The pound is currently trading around 1.5% lower against the Euro and USD from its recent peaks, and with the absence of any supportive data it shows no signs of recovering for the time being. The dollar is also relatively stable at present despite progress from the Republican’s who last night agreed a temporary extension to the debt-ceiling that would only last 6 weeks. It is therefore likely that we have seen much of the dollar movement already until any further decision is made late November.

This morning has so far seen the release of latest CPI figures for Germany which were exactly as expected as the Euro continues to trade higher this morning off the back of upbeat comments from ECB President Draghi last night claimed that the Euro area risks are slightly ‘tilted to the downside’.

The rest of today is particularly quiet for data unless you have an interest in Canadian Dollars, in which case their latest unemployment figures will be announced at 1:30pm.